Informal Notes re: August 13, 2008 GM Health Care Presentations to Retiree Club
Katy Barclay, GM Vice President of Human Resources
Ms. Barclay summarized the state of the business, indicating that these are the worst times GM management has ever seen. As a result, the health care decisions are absolutely necessary to avoid further weakness at GM. The industry is currently running at a 14.5 million vehicle sales rate, in contrast to 17.5 million in 2005.
The YTD 2008 sales rate is down 17% from 2007. August sales rate is coming in lower than a poor July. With the shift in customer purchases, cars now comprise 60% of GM sales, about 3 times the rate of truck sales. 13 of last 14 vehicle introductions by GM have been cars or crossovers. GM’s past penetration of the lucrative full-size pickup market had been at 40%, and at 64% of the SUV market, but the two segments are down 24% and 26% in 2008. The good news is that Malibu sales are up 119%, and the CTS sales up 42% thru June. Residual values are up on both vehicles, with average transaction prices up.
GM’s cash position was $27 billion at the start of the year, and now at $21 billion. Burning cash at a rate of $1 billion/month. GM hopes to generate $15 billion in capital to get to the year 2010. The whole industry is being re-made, with introductions of hybrids, electric, fuel cell and bio-fuel vehicles planned.
In the decade from 2004 to 2010, North America sales are expected to increase only 11%, and Europe 12%. Europe is slowing down along with North America sales. LAAM (Latin America, Africa and Mid-East) expected to be up 52%, and Asia-Pacific up 73%. GM has to stay aggressive in LAAM and Asia, the fastest growing markets in the world. GM is expanding there at record rates.
Today’s meeting is the second of 129 meetings that GM is setting up across the country to explain the health care choices that must be made prior to 1/1/2009. We were the first group to receive the 4-page handout which should answer many of the questions that GM retirees will have. They will be mailed in late August to all retirees. GM has contracted with the Extend Health Corp. to help the transition into new insurance plans. There are many plans available that can provide insurance at the same cost as retirees have now.
The $3600/year which GM will pay to all employees and retirees when they turn 65 will be taxable income. It is not being paid to each member of the family, but just the retiree, surviving spouse or employee over 65. The $76/month that GM currently pays each person for Medicare Part B will disappear, thereby reducing this amount. The payments will come out of the Pension Fund, which is currently over-funded at this time. GM will be watching the level of this Fund very closely. The Hourly and Salary Trust Funds earned 10.7% return last year. There has been absolutely no discussion at this time about reducing or eliminating the SERP program, though it is unfunded.
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Extended care coverage, which picks up when hospitalization and medical benefits have run out, is the program most near and dear to all retirees. Many questions are expected regarding the elimination of this program, but it is unlikely that there will be an ECC replacement program, though GM is still looking at this area. Also, retirees cannot use Health Savings Accounts if eligible for Medicare.
Brian Tenner – Executive Vice President, Extend Health Corp.
Retirees will soon receive all information necessary to make informed decisions about health care plan choices. Each person will have the opportunity to personalize coverage to his or her particular family situation, and Extend Health representatives (who have had at least 6 weeks of training in the field) will be available to talk by phone (one-on-one) with everyone, at no cost. They performed similar services for 150,000 Ford and Chrysler retirees. Extend Health is not an insurance broker, but these personal advisors will serve as objective advocates to get retirees into the best plans for them.
Mr. Tenner said that there will be plenty of time to decide our choices of insurance plans, and most of us will end up feeling confident that we’ve made the right decisions for our family. As a starting point, they will explain the various Medicare programs which provide coverage similar to what retirees have today. Medco Health will be one of the carriers under the Medicare Part D Prescription Drug Plan. GM will send out letters concerning “equivalent coverage” which will avoid retirees incurring the Medicare Part D penalty.
Pre-existing health conditions will not affect our plan choices, except for end-stage renal disease. Advocacy and support services will continue beyond enrollment, and retirees can change plans each November.
In mid-October, we will receive a “Welcome & Enrollment Guide” from Extend Health, which will provide information for our choices from October 15 through November 6, with four enrollment start-dates. In September, October and November, GM will host a series of meetings throughout the country in highly populated salaried retiree locations.
****Please note that these are informal notes I made at the meeting as information to pass along to other members of our retiree club, and are not meant to be complete. They could contain some errors.
R. F. Davis
Submitted By Barbara Bruveris - Thank You!
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